Members of Parliament from the JVI Region Discuss How to Fight Corruption

During April 1-2, 2019, the IMF Communication Department organized a seminar for Members of Parliament (MPs) from selected countries of Eastern and Southeastern Europe titled Taking Anti-Corruption Efforts to the Next Level. Seminars for parliamentarians from the JVI region run regularly at JVI, with almost 40 events since 1996. This time, the focus was on governance and corruption, anti-money laundering, the role of state-owned enterprises, fiscal transparency, and recent economic reforms. In total, 18 MPs from five countries (Bosnia and Herzegovina, Moldova, Kosovo, Serbia, and Ukraine) took part in it. 

After an introductory session explaining the IMF’s mandate, areas of work, and engagement with stakeholders, MPs discussed economic developments in the region and the outlook for the economies of Central, Southern and Southeastern Europe. They focused on some of the key economic challenges their countries are facing and what role legislators can play, and reviewed recent economic reforms, with particular focus on the IMF-supported reform program in Serbia.

Governance vulnerabilities and corruption undermine the public’s trust in government, distort competition, and endanger economic development. MPs discussed the new IMF framework for enhanced engagement on governance and corruption, adopted in April 2018. They also looked at the main elements of the recent IMF review of the anti-money laundering and combating the financing of terrorism (AML/CFT) strategy and discussed how the IMF is assisting its members to put in place effective AML/CFT frameworks to support economic and financial stability. Several country case studies from the region were presented, too, such as on Ukraine or Moldova.

Fiscal transparency plays a key role in preventing corruption and promoting good governance by providing legislatures and citizens with the information they need to hold governments accountable. It can facilitate efficient allocation of resources by enabling the market to evaluate and impose discipline on government policies. The IMF presented the recent fiscal transparency evaluations in several CESEE countries, focusing on public investments, the most corruption-prone budget item. Experience with parliamentary budget offices, using the example of Austria, was reviewed in terms of promoting greater budget transparency and accountability.

Based on available studies, the state is still prevalent in a wide range of sectors in many countries of the region. State-owned enterprises (SOEs) are less productive than private firms and use resources (mostly labor) inefficiently. Similarly, state-owned banks have lower returns on assets compared to private commercial banks, not least because of their links to SOEs. The case of Bosnia and Herzegovina was discussed, including policy proposals to improve the government’s ownership functions and oversight policies. 

Adam Gersl, Lead Economist, JVI